Despite the prospect of a potential rate hike from the US Federal Reserve next month and continued strength in US economic data, it was not enough to stir buying activity in the US dollar last week.

Instead, traders continued to pile into commodity currencies such as the Australian, Canadian and New Zealand dollars.

That’s the brief synopsis of the latest US Commodity Futures Trading Commission’s (CFTC) latest Commitment of Traders (COT) report, which revealed long positioning in commodity-linked currencies continued to scale multi-year highs last week.

According to ANZ, citing non-commercial positions reported by the CFTC, net long AUD positions increased by a further $US500 million to $US3.5 billion last week, something that corresponded with spot iron ore prices soaring to the highest level seen since August 2014 on the cutoff date of the survey.

Source: ANZ

Net positioning is simply the sum of all long options and futures positions less short positions in a particular currency. A net long position suggests that traders, as a whole, think that the currency is likely to strengthen in the period ahead.

ANZ uses non-commercial positions reported by the CFTC as they are seen as a proxy for speculative positioning given they seek to profit from movements in the asset price as opposed to hedging business activities.

The build in Aussie dollar net longs is interesting given the AUD/USD has failed to break convincingly above the 77 cent level on several occasions now in the past six months. Obviously many traders think that wall of selling resistance will be overcome in the period ahead given continued buying since the start of 2017.

The continued buying in the Aussie was mirrored in other commodity-linked currencies last week.

ANZ said net longs in the Canadian dollar rose by a further $US300 million to $US1.9 billion, leaving it at the highest level since mid-February 2013. Strength in crude prices as a result of the decision from OPEC and non-OPEC producers to curtail production — announced late last year — in the first half of 2017 has no doubt assisted traders confidence that the CAD is likely to move higher.

Like the AUD and CAD, optimism over the New Zealand dollar also rose with net long positions increasing by another $US100 million to $US2.2 billion, fast approaching the previous record-high of $US2.3 billion set in mid-April 2013.

Combined, net long positioning in all three of these currencies now stands at the highest level seen since early 2013, something that has come despite the broader CRB commodity price index flat-lining since the start of the year.

Source: ANZ

That probably reflects a recent pullback in US government bond yields, a factor that has undoubtedly impacted sentiment towards the US dollar over the past month or so.

ANZ said that net long positioning in the US dollar held steady at $US11.4 billion last week, snapping a run of six consecutive declines in the process.

“Strong US data and a live March FOMC meeting was not enough to entice funds to start buying dollars again,” said Khoon Goh, head of Asia research at ANZ.

“The neutral net dollar positioning change was due to the $US1.5 billion of EUR selling in the week, the third consecutive week that leveraged funds have sold the single currency.